- April 6, 2020
- Posted by: Anita Iyer
- Category: Blog
What is Mining?
The economics and algorithms differ from each coin. Mining is a means to verify transactions done on a decentralized network and introduce new coins into the ecosystem. A decade ago mining was easy, a basic PC or laptop had enough power to handle transactions and generate coins; as time went by, mining difficulty has increased and mining rigs have been adopted by Ethereum miners which consists of a power supply, motherboard and gaming graphic cards, which can calculate extremely fast and complete many transactions swiftly, earning the miners Ethereum. Bitcoin uses a different algorithm which requires an even more powerful computing output for mining called ASIC, which is a device that is designed for the sole purpose of mining. Generally, each ASIC miner is constructed to mine a specific digital currency, whereas mining rigs are more flexible and can pretty much mine 100s of coins as long as the graphic cards could read the algorithms, both AMD and NVIDIA can mine a list of coins.
When all the coins that will ever exist are all mined on a specific network, mining will likely simply be for verifying transactions. With mining, a miner has a cost of electricity they have to spend to solve a “mathematical problem” that is checked by other participants in the network to see if it’s correct or not. If it’s found to be incorrect, the work that miner has done is eventually considered invalid and they are given no reward for their work; if it’s found to be valid they are rewarded with newly minted coins and some of the transaction fees from the network. Since there is an economic cost to mining, this is an incentive to have participants in the network stay honest, hence why crypto is becoming the most trusted concept on money in terms of limited supply and transaction accuracy.
Ultimately, the role of miners is very important as they practice the PoW (proof of work) concept and help with issuance of new coins as the central bank can issue new units of money at any time based on what they think will improve the economy while with crypto-coins the issuance rate is set in the code, so miners cannot cheat the system or create coins out of thin air. Miners also confirm transactions made in the blockchain, which is done by installing a software on a mining-rig or ASIC machines. Miners also secure the Bitcoin/Ethereum network by making it difficult to attack, alter or stop. The more miners that mine, the more secure the network is. The only way to reverse Bitcoin transactions is to have more than 51% of the network hash power. Distributed hash power spread among many different miners keeps Bitcoin secure and safe.
What Can I Do with Cryptocurrency?
There are many utilities of owning cryptocurrencies, with 1000s of crypto-coins and tokens to choose from all with a unique use and purpose.
You can shop at over 100,000 merchants accepting Bitcoin and other currencies, this includes companies like Microsoft, Overstock and travel companies such as Expedia and Cheap Air. Several other restaurant chains like KFC Canada.
Many Visa cards carry Cryptocurrencies as credit, you can store your cryptocurrency on your Visa card wallet and spend at over 40 million shops and stores around the world. The physical card will be mailed to you and you will need to activate it just like how you activate any Mastercard/Visa card, or you can use the card-less payment option via your phone. The most notable companies that partnered with Visa to make crypto a payable currency are TenX, Nexo, and crypto.com using the MCO Visa card.
The other more modern things you could do with cryptocurrencies is buying an apartment or a house. Many real-estate companies now accept bitcoin and other currencies. With success stories emerging in 2018 during the cryptocurrency price increase boom, we’ve heard stories of people buying a million-dollar home for just $100,000, with prices of coins and tokens increasing 10x in a matter of months, many converted their gains to assets. Another use of crypto worth highlighting is iOWNX, which is 1st of its kind crowd-investing platform based on blockchain technology. The iOWN Token is available to purchase from different crypto-exchanges, the token is utilized to invest in many businesses and projects that are seeking funds for a piece of equity from their businesses. With today’s economic climate, bank loans are extremely hard to get, let alone the high-interest rates and not forgetting that a huge population of the globe remain unbanked. iOWNX provides the solution for both parties, businesses seeking funds and investors of all financial capabilities to acquire equity that pays off on regular basis, iOWNX provides its users with the choice and full control to decide on what they would like to invest in, from equity in real estate, restaurants, technology, retail or green energy.
How to choose your investment wisely?
Like many financial decisions, this depends on many factors, but you can still determine it nonetheless. Here’s how you can do it.
First, you will need to do your own research, what utility does this coin or token provide what can you use it for…is this token used for investment, pay for a service, purchasing items on an online retail store or can be used as a store value. There are thousands of coins and tokens available to buy on exchanges they all have a purpose in every sector, from retail, investment, business solutions, energy, music, sports, and entertainment. Choose the right token that fits your needs, is it simply a store value? Are you looking to profit from it or utilize it?
Your research will have to include the following, if you are looking to potentially profit from buying tokens or coins, analyze the project and use for this token, will demand to be created? Does it provide a unique solution? Are the limited supply and circulating supply of the coins or tokens sufficient to meet the demand? It’s also important to have a look at the project’s team are they qualified, have the experience to manage the project, do they communicate often to the public? Finally, have a look at their web and social media presence, do they reply to your questions, do they keep the public updated on the project updates and deliver in the time. Many projects have either halted or ended as companies have decided to shut for some reason, yet their tokens are still listed and are available to buy as some smaller exchanges are either unaware or ignore the de-listing request for ghosted projects. So, with a non-progressive token or coin with literally no use, it does not seem like a great idea to invest in.
Other practices crypto beginners tend to use as they yet don’t have the knowledge of how market price changes and work is not to buy a certain coin or token all in 1 day, take Ethereum for an example, if you decide to buy 4 Ethereums;
First, try to spread your purchases in 4 weeks’ time rather than buying the 4 Ethers in one go.
By purchasing 1 Ethereum a week, this reduced your risk of buying 4 Ethereum at a high price all at once as the price of coins and tokens change every minute. You can gain advantage during one of the weeks were Ethereum is selling at 20% less than the previous week.
Spreading your purchase could lower the risk buying a crypto currency at a high price. It is always best to seek the advice of a crypto financial expert, find a good balance between ground-breaking news, new updates or releases on a certain project that could impact the price positively or negatively and decide the best time to buy. Generally, the golden rule in trading is “Buy red and Sell green” which reflects to buying when the market red arrows appear on a certain stock e.g. (buying a share worth $100 now for $80) and selling when the market green arrows appear e.g. (selling a share worth $120 which you’ve purchased for $100, giving you a profit of $20).
To sum up, try to be skeptical of what you read online when someone is claiming that it is the right time to buy a certain cryptocurrency, get more information from other sources to back up the claim. Read and research or seek help from a professional adviser to understand when is the right time to buy; with time you would be confident with your knowledge and you would be able to forecast or predict the market changes and find the right time to buy. Trade Smartly!